Nearly one in 10 mortgage holders have struggled to make a repayment or pay a bill as rising interest rates tighten the screws on household budgets.
The central bank has already lifted interest rates from historic lows of 0.1 per cent in April last year to 3.35 per cent last month, and is expected to hike rates again when the board meets on Tuesday.
Another 25 basis point increase, as widely anticipated, would take the cash rate to its highest level since May 2012.
A survey by comparison website Canstar found nearly 70 per cent of renters and mortgage holders were struggling financially due to cost of living pressures and higher interest rates, with 10 per cent of those 3100 surveyed already late on a payment.
The research also revealed fading confidence in the Reserve Bank's ability to calm inflation by rising interest rates.
More than half said higher interest rates were not the solution to elevated inflation and believed people would continue to spend regardless.
Canstar finance expert Steve Mickenbecker said households paying off loans on their own homes or investment properties were at the pointy end of interest rate increases.
"They are rightly nervous about the Reserve Bank and government's ability to ease inflation and cost of living pressures," Mr Mickenbecker said.
For the average variable rate mortgage holder with a $500,000 loan and 30 years remaining, another cash rate hike will add $1051 to monthly repayments compared to April 2022.
If the cash rate peaks at 4.1 per cent, as some economists are predicting, monthly repayments will swell by $1217 compared to April last year.
Mr Mickenbecker urged households to refinance to get a better deal and consider fixed rates as the average fixed rate is now only 0.11 per cent more than the average variable rate.
"Fixed rates may also be back on the agenda for borrowers who can afford repayments today but fear future increases."
While another lift to the cash rate rise is broadly expected when the board meets on Tuesday, economists are still largely undecided about how much further the RBA has to hike.
Westpac economists anticipate the cash rate peaking at 4.1 per cent in May before an easing cycle kicks off in early 2024.
Westpac chief economist Bill Evans said the bank had kept its forecasts stable despite national accounts data revealing "extraordinary pressures" on household budgets.
Mr Evans said domestic demand was flat in the quarter despite the significant fall in the household savings rate, which should have freed up spending capacity.
While the bank's economists were surprised to see the sharp contraction in real incomes in the December quarter, Mr Evans said the national accounts result was broadly consistent with the bank's expectations for weakening spending in 2023 and 2024.
"We expect three more rate hikes from the RBA through 2023 while rates are forecast to fall by 100 basis points in 2024."
